The Department of Telecommunications (DoT) has framed a six point agenda aimed at encouraging local manufacturing of telecom equipment in the country.
Earlier, the Ministry of Commerce had sought DoT’s comments as part of its overall strategy to improve exports under the Foreign Trade Policy for 2013-14.
DoT has drafted its proposal with a view to improve the existing export-import imbalance in the telecom equipment industry. It has proposed to provide export status to local telecom equipment suppliers, a zero duty structure for the parts and components used for manufacturing and bringing the countries in the South Asian Association for Regional Cooperation under a focus market scheme.
Currently, telecom equipment, including mobile phones, worth Rs 500 billion is being imported. DoT is looking at meeting 30 per cent of the country’s telecom equipment requirement through a preferential market access policy which gives preference to telecom equipment made in India.
In its proposals, DoT has noted that providing a deemed export status will allow the Indian telecom products industry to avail the low-cost working capital financing and other export-linked benefits available to exporters. Further, it asserts that currently, manufacturing and competing with imports at zero duty level is a big challenge for Indian telecom equipment manufacturers. Therefore, it is essential for the government to provide a rationalised tariff structure to the domestic tariff area units as part of which all inputs required for manufacturing telecom equipment are eligible for import at zero duty.
DoT has also suggested including telecom products under the focussed products schemes. Currently, the Directorate General of Foreign Trade offers incentives for exports from India to certain priority sectors as 7 per cent whereas for telecom products, it is only 3 per cent. Indian companies face competition from global suppliers who are backed by their EXIM banks with low-cost working capital financing and other export benefits. Therefore, DoT has requested the government to raise the eligibility limit of the marketing development assistance scheme from Rs 0.15 billion to Rs 1.5 billion. Currently, this scheme focuses on regions such as Africa, ASEAN, Latin America and Iran with export up to Rs 0.15 billion eligible for the subsidy.
